Not everyone is born with an innate understanding of finances. There are still plenty of people who struggle to save a decent chunk of their monthly salary for retirement. For someone living paycheck to paycheck, it would benefit a lot if they could find a way to streamline their personal expenses. If this sounds like you, you need to begin tracking your personal expenses right away. The more you procrastinate, chances are, you will never do it.
Here Are the Best Ways to Track Your Personal Expenses the Easy Way
1) 50/30/20 Rule Budget
2020 presidential candidate and Senator Elizabeth Warren mentioned this rule in her bestselling book All Your Worth: The Ultimate Lifetime Money Plan. The basic premise of the 50/30/20 Rule Budget is to spend 50 percent of the monthly income on needs, 30 percent on wants and the rest 20 percent should be saved for the future. This plan is tailor-made for someone who struggles to manage their personal expenses. You don’t need to be a financial expert to execute the 50/30/20 Rule Budget.
2) Use a Free Online Service Like Mint or Personal Capital
You will be surprised to learn that there are free apps/websites/Softwares available that can work as an online financial advisor and also offer you personal wealth management services. All you have to do is link your credit card to one of these services. They will track your monthly expenses and send you easy-to-read reports each month. You can also use the charts and graphs to visualize the information. If needed. There is literally no downside to using these free services, so go ahead and sign up for one.
3) Use Spreadsheets
If you are too skeptical about sharing your personal information with someone else and wish to handle the matters all by yourself, using a spreadsheet can work for you. You don’t have to purchase expensive software programs. Just create a Google account and use Google’s Spreadsheet program for free.
Create a sheet named Personal Finance + “Current Year”. Further, create a new tab at the start of each month. After every major or minor transaction you make, update the sheet with transaction date, transaction amount, money spent on, category, etc.
Why Should I Track My Expenses?
Why should I track my expenses? I understand that for a college student and haven’t yet started paying off your student loan, or someone born in a frugal family, it does not make any sense to keep a track record of their finances. You are either not making a substantial sum or are already stringent enough with your finances. But you need to keep in mind that, American household debt had hit a record $13.21 trillion in 2018. It is estimated to go up in the following years. You don’t want to be one of the unfortunate people who had to bear the burden of debt on their young shoulders.